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Interest rates of zero pct not worth the effort
Despite the Government’s decision to support farmers with interest rates of zero percent to help them buy agricultural machinery and materials, it is still not worth a try.
The southern province of An Giang is one of the Mekong Delta provinces, which has made a breakthrough in encouraging farmers to buy agricultural machinery and equipment.
The province has agreed to support 75 percent of the cost of 200 combine harvesters for farmers in 2008 and 2009 and 70 percent for loans over three years.
In theory, farmers could benefit just after two years if they are set to buy machinery and equipment.
The Director of the Bank for Agriculture and Rural Development’s branch in southern Tien Giang province says that even though farmers can access interest rates of zero percent, both the bank and the farmers will be in trouble if the loans are used to buy combine harvesters that are not made in Vietnam.
According to the Mekong Delta Rice Research Institute, Vietnam has a very small number of combine harvester manufacturers that can only produce 50-60 units a year. Therefore, it will be a long way before we can meet farmers’ need for around 13,000-15,000 harvesters.
In fact, farmers have to wait for several months or even over a year to receive a combine harvester after it has been ordered.
But the quality of combine harvesters manually made from ‘floating’ materials on the domestic market is still a question mark.
Dr Mai Van Nam, head of the Economics and Business Administration Faculty at Can Tho University says that the agricultural machinery sector has no specific plans for development. That’s why most combine harvesters and grass-cutting machines have been made by farmers themselves.
Duong Nghia Quoc, Vice Director of the Dong Thap provincial department of agriculture and rural development, says: “Decision 497 only encourages the purchase of home-made machinery with low-interest loans. But the quality of such equipment produced in the Mekong Delta is still below standard. Is it also necessary to encourage the purchase of imported machines?”
Long-term stimulus
Vu Hung Dung, Director of the VCCI branch in Can Tho City, suggests that the government should introduce a zero percent interest rate support policy over 5-10 years to help farmers buy new and modern machinery.
“The current short-term stimulus plan is unlikely to benefit farmers, who find it difficult to access the loans,” Dung says, adding that farmers would have to buy equipment hastily without making a good choice and therefore will be susceptible to poor quality products.
In addition, Dr Le Van Banh proposes that the government give businesses preferential loans with no interest to boost their production or help them to link up with foreign partners to mass-produce combine harvesters at reasonable prices.
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